Reference no: EM132593578

Questions -

Q1. Dawson, Inc., had regular tax due of $35,000 for the tax year ending December 31, 2019. It also had $60,000 of alternative minimum tax (AMT) credit carried forward from prior years and available in 2019. What is the amount of the AMT credit that can be claimed in 2019?

A. $12,500

B. $25,000

C. $35,000

D. $60,000

Q2. Fleming, Inc., is a C corporation that files its return using a fiscal year. For the return for the fiscal year ending on April 30, 2019, what corporate tax rate(s) applies to Fleming's income?

A. The progressive tax rates, including a potential 3% or 5% surtax.

B. 21%. No surtaxes will apply.

C. 21%; however, a surtax of 5% or 3% may apply if Fleming's taxable income places it in the appropriate range.

D. A blended tax rate that applies the progressive rates to all income attributable.

Q3. For the tax year, LMN partnership reported a $63,000 ordinary loss and a $25,000 increase in recourse liabilities for which the partners are liable. Gina, a 50% partner, had an adjusted basis of $15,000 at the beginning of the year. What is Gina's allowable loss and her adjusted basis in LMN at the end of the year?

A. Allowable loss: $31,500. Adjusted basis: $6,500.

B. Allowable loss: $31,500. Adjusted basis: $4,000.

C. Allowable loss: $31,500. Adjusted basis: $0.

D. Allowable loss: $10,000. Adjusted basis: $4,000

Q4. Each of the following are examples of a partnership EXCEPT:

A. A business entity with a limited and a general member agreement.

B. A business entity with a single member LLC and employees who materially participate in the business.

C. A business entity with a sole proprietorship, two estates, and a corporation as members. The sole proprietorship is responsible for day-to-day operations.

D. A husband and wife entity that engages in a business activity and shares all profits and losses.

Q5. Which of the following is the best example of a passive activity? A limited partnership in which:

A. The limited partner only has a vested interest in the partnership.

B. The limited partner is also considered a general partner.

C. The limited partner was active in a personal service activity for three preceding tax years.

D. The corporate partner participates in the business activities.